AstraZeneca reorganises R&D and cuts 1,600 jobs

AstraZeneca has taken the axe to its R&D operations, saying it intends to cut around 1,600 jobs around the world by 2016 to reduce costs by some $190 million a year over the same period.

Most of the cuts will be felt at the drugmaker's US and UK operations, but there was some good news for the UK as the company said it would invest around $500 million in a new R&D facility in Cambridge. All told, the changes will lead to restructuring charges of $1.4 billion.

AZ said it would now concentrate its small-molecule and biologic R&D into three key centres, namely Cambridge, Gaithersburg in the US and Molndal in Sweden, which will benefit from investments to "improve pipeline productivity and to establish the company as a global leader in biopharmaceutical innovation".

The company is widely acknowledged as having one of the weakest late-stage pipelines among its peers, ranking just 15th in a recently-published report from IDEA Pharma on how successfully companies commercialise their new molecules.

In addition to the layoffs there will be a fair amount of musical chairs played, with some 1,600 workers at Alderley Park in Cheshire relocating to Cambridge and other facilities in AZ's network - including all R&D staff - although 700 workers in non R&D functions will stay put. Corporate and global commercial operations in London are also heading for Cambridge, with the firm's London office closing by 2016.

The staff reductions in the US amount to around 650, with 1,200 workers leaving AZ's site in Wilmington, Delaware, while Gaithersburg - which is the primary site for AZ's biologics subsidiary MedImmune - will see a net increase of 300.

The news has been released ahead of a strategy update later this week, at which recently-appointed chief executive Pascal Soriot has promised to give further details of the restructuring plans and the company's future direction.

Reuters has suggested that one of the main themes of the R&D restructuring will be a retreat from anti-infective and neuroscience research, with greater emphasis on cancer, cardiovascular disease and metabolic disorders such as diabetes.

Soriot has inherited a tricky situation at AZ, which is in the midst of a patent cliff affecting big-selling products including cholesterol lowerer Crestor (rosuvastatin), gastrointestinal medication Nexium (esomeprazole) and antipsychotic Seroquel (quetiapine).

The latest round of job cuts comes around a year after AZ announced it would slash 7,300 jobs - including 2,200 from R&D - in an attempt to save $1.6 billion a year by the end of 2014. Two earlier rounds in between 2007 and 2010 had already set a headcount reduction target of more than 20,000.